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15 Sep 2009

Irish Greens go for the 'yes but no but yes but' option on banking plan

As we say over here its the 'yes but not but yes but' option.

Message from John Gormley

Dear member,

I wish to update you on the party convention last Saturday 12th September and our deliberations on the NAMA legislation.

I would like to begin by thanking everybody who travelled from all around the country; in particular those involved in the organisation of the event and, of course, the three consensors who did such a wonderful job at the meeting.

The meeting was constructive, with many members expressing their views with conviction. I recall only one occasion when there was a dispute between the chair and a party member about the right to speak. The contribution of Arthur Doohan was warmly applauded and the work of both Gary Fitzgerald and James Nix widely praised. Following the event I made it clear that while satisfaction had been expressed about some of the amendments to the legislation achieved so far, including the windfall tax, much more work had to be done if NAMA in its final format were to gain acceptance by the Green Party membership.

As you can see from the results which we have sent to you, the current NAMA result came in fourth, while ‘NAMA plus amendments’ was the preferred option in the Preferendum. The Fine Gael proposal of the ‘magic bank’ and Labour’s plan for pre-emptive nationalisation did not score highly. None of this of course is to preclude party members from changing their minds as this debate develops.

The key question for many delegates was how the valuations would occur, the amount being paid for the impaired loans, and to what extent would the taxpayer be protected. There was general disquiet expressed about giving bank shareholders a free lunch.

Likewise, may expressed the view that NAMA would only be worth it if it actually got credit flowing in the country. Again and again the view was expressed that there could be no return to the days of over-zoning and the property bubble.

My colleague Eamon Ryan made the point that the higher property prices of the Celtic Tiger benefited an older generation at the expense of people in their 20s and 30s. A number of speakers agreed with this point and said here had to be some social dividend with the NAMA legislation. I have made it clear in interviews I gave today that this must happen.

The idea of asking the people of this State to pick up the tab for bankers’ mistakes without any gain in terms of the common good is unacceptable to the Green Party and indeed the wider public. Even allowing neo-liberal market forces to do their worst and allowing the banks to collapse was seen as preferable to more people in Athlone than the current proposal.

It’s fair to say the meeting approached the NAMA issue with great caution and concern and of course expressed uncertainty about the adoption of NAMA. Even in its reconfigured form it can by no means be take for granted that people in the party will find it acceptable.

So it is extremely important that we continue in the coming weeks, particularly as we approach committee stage, to inject as much green thinking as possible in the NAMA legislation. For your information I also include some of the changes to NAMA which I hope you will find of interest. If there are other changes I will keep you well informed.

Finally we did not get a real opportunity to discuss the review of the Programme for Government. But as you are aware this and NAMA will be discussed at our convention on October 10th. Again we will try to keep you well informed about all developments in this regard.

Kind regards

John Gormley

------------------------------------------------------------------------------------------- This it the text of a media statement issued this evening:

Statement on Saturday's Green Party meeting on Nama

The following is the result of a 'preferendum' held in Athlone on Saturday amongst Green Party members, on the proposed legislation establishing a National Asset Management Agency (Nama.)

The purpose of holding a preferendum was to identify what consensus existed amongst Party Members on a range of possible options that the Party could pursue. The options detailed below are a summary of the options that came up during the meeting. These options and were compiled by three people representing different viewpoints within the Party and based on conference discussions.

The Green TDs and senators will use the results of the poll to inform its engagements with the Minister for Finance while the Nama Bill is further modified by the two Houses of the Oireachtas.

Reports concluding that members were either heavily 'for' or 'against' certain options are misleading. But the 'ranking' of preferences by Party members of the options presented on Saturday help identify the option most favoured. An analysis of the ballot shows option C - NAMA with Green Party modifications - was most popular

NOTE RE VOTE-SCORING SYSTEM: Members are asked to rank the options by preference. Each preference is given a number of points. The number of points varies according to the number of preferences expressed on the ballot paper For example if a member chooses just one preference - marked 1 it is accorded just one point. But, if a member ranks all available options 1 to 6, then the first preference is worth six points, the second preference gets five points and so forth. In summary it is a form of proportional representation applied to a referendum.

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Below is a review of some of the changes already achieved to the NAMA legislation, announced last week before the members' conference

Green Party make significant changes to NAMA Bill Following a Government meeting today, Green Party Minister Eamon Ryan announced changes to the NAMA Bill due to be published tomorrow.

The changes include:

Risk-sharing to protect the taxpayerA risk-sharing mechanism has been agreed by Government, which will deliver an equal sharing of the risk between NAMA and the banks.

2. Guarantee of on-lending

A condition of participating in NAMA will be a guarantee that a fixed percentage of the loans issued will be lent on to small and medium enterprises.

3. Banking reform

All directors of institutions participating in NAMA will, if appointed prior to 2008, be required to step down. They will be replaced over the course of two years to allow for an orderly changeover of management.

The Minister for Finance will, upon publication of the Bill, write to the leaders of the opposition parties seeking their recommendations for nominations to the NAMA board.

It will be a criminal offence to seek to lobby NAMA. All employees will report attempts to influence the operation of NAMA to the Garda Sochna,

Legislation to put the revised Combined Code of Corporate Governance on a statutory basis will be forthcoming. NAMA will be subject to this Code.

4. Windfall Tax to discourage speculation A windfall tax of 80% on profits gained from increases in land value due to re-zoning decisions will be introduced to ensure that land speculation is not rewarded in the future.

5. Valuations criteria

The Minister for Finance will publish regulations setting out the criteria for analysis of long-term value. These include:

- The Minister for Environments analysis of the extent of zoning and planning permissions granted - The Minister for Transports analysis of future land use based on transport planning - The Minister for Energys analysis of trends in energy prices as a result of the decline in fossil fuels over the medium to long term

6. Limit on borrowing

The amount NAMA can borrow without the approval of the Minister for Finance has will be reduced from a 10 billion limit to one of 5 billion.

7. Reporting requirements quarterly

NAMA will be obliged to report its activities to the Minister for Finance every three months, instead of the annual report included in the draft legislation.

Included in this report will be crucial information such as the number of loans outstanding, amount of non-performing loans, foreclosures, incidences where liquidators and receivers have been appointed, the sums recovered from property sales and a full balance sheet of NAMAs assets and liabilities.

The Minister for the Environment will bring forward his Planning Bill for enactment, which will include measures to ensure that the bad planning practices of the past are not repeated.

Announcing the changes, Minister Ryan said: Nobody would choose to be in a position in Government where the state must act to clean up and repair the banks. However, this is the position we have found ourselves in. Having examined the options available over the past 6 months, I believe that NAMA is the best option to mend a broken banking system.

Legislation of such monumental importance to the Irish state requires close scrutiny. The Green Party has been questioning, checking and changing this legislation over the past months. We will continue this level of engagement and improvement within Government.

The measures we announce today will increase the protection afforded to the taxpayer. They guard against politicisation of NAMA and its operations. All of these measures are designed to make sure that the banking and planning practices that brought us to this crisis cannot be repeated.